Sum of USD350 billion lost by Gulf sovereign funds: UN Report

Available at: http://topnews.ae/content/2811-sum-350-bln-lost-gulf-sovereign-funds-reports-un

A latest UN report has specified that the global financial crisis has had an adverse affect on Sovereign wealth funds (SWFs) of four oil-exporting Gulf States, as they lost nearly 350 billion dollars last year. But it should be noted that after the funds of Saudi Arabia, Kuwait, Qatar and Abu Dhabi received enormous returns from oil income from the government, they almost maintained their total asset value at the end of 2008.

The United Nations Conference on Trade and Development (UNCTAD) said in the report dubbed World Investment Report 2009, released last week, “Assets held by the four Gulf funds dropped to 1.115 trillion dollars last year from 1.165 trillion dollars at the end of 2007 and those government injections of 300 billion dollars helped narrow their losses.” The most affected was the Abu Dhabi Investment Authority (ADIA), which lost nearly 183 billion dollars, from the 453 billion dollars that it had in 2007. However, the fund was able to end last year at 329 billion dollars, as the government pumped 57 billion dollars in it.

A sum of 94 billion dollars was lost by Kuwait Investment Authority (KIA), from 262 billion dollars it held at the end of 2007. But since the Kuwaiti government injected 59 billion dollars into the fund, it (fund) was able to stand at 228 billion dollars at the end of last year. The report said, “Qatar Investment Authority (QIA) lost 27 billion dollars and ended at 66 billion dollars in 2008, while Saudi assets, run by the Saudi Arabian Monetary Agency (SAMA), valued at 501 billion dollars at end-2008, shed around 46 billion dollars.”

It should be noted that till date, Gulf SWFs have never revealed the size of their assets nor losses. The UNCTAD report described Gulf SWFs as becoming more proactive investors in recent years, along with entering riskier investments and targeting strategic holdings in international companies. UNCTAD said, “The recent collapse of real estate and equity markets has generated large losses for SWFs, but it also offers investment opportunities.”

Due to this, some Gulf SWFs have become apprehensive about investing abroad. Instead, they are now investing in domestic economies. Over 13 million barrels of oil is pumped by the four Gulf states per day, just under half of total OPEC production of around 29 million bpd.